| July 2004 | |
| Maximizing your Potential By George Carageorge | |
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Now that you have set up your restaurant, or purchased an existing one, how do you maximize your potential? Most people will think, “What’s this idiot talking about?”
Most of you have given enormous thought and consideration to your menu, your staffing and other critical factors already. You have also worked out what you should be making in terms of margin to pay your overheads and extract profit, but have you given thought to the future…yes, the future! By this I mean what are your plans after the business has worn you out? Have you been clever enough to think ahead and are you working towards a long-term goal? We may seem like we are a little lost in this article, but there is a point to it if you get to the end. It is worth reading.
Now think about this…the real profit in a business is selling it after you have established it! Yeah, sure you’re going to make a few thousand bucks a week if you spent two or three hundred thousand on your business, but those are just wages if you’re working 80 hours a week, especially if your staff wage bill is high. The real smart operators would not work this hard. They would pace themselves and work five or six days even, shorten their hours and build their business on reputation, quality, value and service.
Too many of you want to grind the business so hard early on, you forget the real long-term goal. Unless you’re a family business, like ours, it’s impossible to run a business in our industry for long, indefinite periods without a real break…like selling it and getting away. Ahhh, selling. Now that’s when, if you have been really clever, you come into the real money.
What is maximizing your potential, and how do you do it? You do it by not being greedy. You do it by taking a modest profit and not screwing your clients, suppliers and other business associates. You do it by leaving a little for everyone in the pot, especially your clients. You do it with good service, décor, good quality and good value. Portions of your business are making long-term, non-income taxable profit for you. This is the reason for maximizing long term potential. In four or five years your business should, if you’re maximizing your potential, yield you more than 100 percent capital gain. Remember, don’t be greedy in the short term. All of a sudden, if you do things as I say, the money will start rolling in and you will have built a really good asset to sell or lease when you need a rest.
Let us digress just a moment. If you’re buying an established business, you need to find out how you can grow it by adding to its value. Look for reasons why you shouldn’t buy it, and there will be the answers to why you should buy it. Look for problems that your experience, knowledge and business savvy are good enough to fix or rectify. This will allow you to take an under-performing and undervalued business and add value.
I see too many would-be entrepreneurs who start businesses with only one view and sell it quickly after they have built it up quickly by gimmicks. My advice to newcomers is to be wary of businesses not established very long and those that promise riches beyond what is really logical for such a young business. There are exceptions, but they are rare. There is no such thing as a fairy godmother. Good businesses in our field that ask for big money should be long established with consistent growth records, verifiable from suppliers, bank records and tax records. Forget about the lure of cash. It’s a crock if you’re paying big dough for a business or setting one up with lots of capital. The lure of cash is for hit and run owners who rarely have a business with long-term sustainable substance. This is what maximizing your long- term potential is about in my view.
How else do I get there? Those of you who are shrewd will be doing this almost without really thinking about it. Some more inexperienced newcomers may find it more difficult, especially in a franchise situation where you’re subject to more rigidity in terms of entrepreneurial flair.
So what are we are doing to maximize the future potential and ultimate financial rewards of our hard work? Not being too greedy, for one, but what else in the course of not being too greedy? It’s how you run your business for the long term. We need to explain this with examples of actions that are not allowing you to maximize your potential.
We all make mistakes so you need the brainpower, passion and the will to fix them. For example, you may have bought a dough mixer that was undersized because you thought it would do the job and was a lot cheaper than the bigger model. But guess what, it’s too small for the volume of business and is overworked, so it breaks down a lot. Get a bigger one. It doesn’t matter if you are in the pizza business or own a pub or club, you only have a few hours to get your money. So why, especially if you’re a delivery based business, did you buy that wood-fired oven that can only handle a dozen or so pizza’s at a time and requires a lot of manual labor and specialized skill? You needed a double conveyor didn’t you? Well, buy one that doesn’t require an Einstein to operate it so you can maximize your potential all the time. If you can’t buy it, lease it.
Another phenomenon I see is owners putting inexperienced staff in charge in times that are perceived as low-level importance. For example, lunch time trade is often sought after in strip shop areas to compete with the chains. But because the owner/operator works the night shift, he places the responsibility on junior staff, who whilst willing, are inexperienced. The end result is the product delivered is not up to standard, thus doing more harm than good. I have seen this even with highly experienced operators who should know better. Believe me, it’s true.
I could go on, but you get my drift. Look to the long term and don’t be too anxious about immediate profits. Be sure your turnover covers your bills, but don’t compromise on anything; not staff, equipment supplies, food supplies, packaging or any of the little things that make your business better than the rest. This means don’t sacrifice for the short term.
Building a business for the long term is cruel, hard work and sometimes goes without immediate recognizable benefits. Persistence and the passion to succeed above all odds will pay off in most cases. Finally, never ever stop learning. Only a fool thinks he knows everything. Be humble and quite about your success.
– PMQ –
